5th May 2015

Scottish Government issue second version of proposed changes to Tenancy Law

Background:

In November 2014 I published an article considering the Scottish Government’s initial consultation which aimed to develop and modernise Scottish Tenancy Law. The article concluded that whilst the purpose of the proposed changes was laudable, there were several aspects that required greater consideration. The Scottish Government has since issued fresh proposals in March 2015, but do these proposals adequately rectify the perceived shortcomings of the previous proposals?

“No fault eviction”

The initial consultation concluded that 81% of the respondents were in favour of abolishing the “no fault” ground for eviction based purely on the expiry of the tenancy period. Those in favour of abolishing the “no fault ground” argue that it will provide greater security for tenants and create more stable communities. Those against the abolition believe that the abolition restricts the private rental market and makes property management and investment less attractive to potential landlords.

The Scottish Government has opted in favour of the abolition but seeks to reassure landlords by proposing 11 “mandatory” grounds for eviction, although whether all of these grounds are truly mandatory will be considered below. The Scottish Government proposes that when it is necessary to determine whether it is reasonable for these 11 grounds to be employed the matter will be referred to the new First Tier Tribunal, rather than the courts.

Whilst the Scottish Government believes that by remitting this matter to the First Tier Tribunal it will allow the question of reasonableness to be decided more swiftly than is the case in the current court system, the problem still remains that a far greater volume of cases will require a fuller consideration of the facts which will unavoidably lead to delays in certain instances.

Discretionary and Mandatory Grounds:

The Scottish Government had proposed that there would be 8 grounds for possession and that each of these were to be mandatory grounds. However, there was considerable unease from respondents as to removing the Tribunals discretion in determining the reasonableness of eviction.

As a result the Scottish Government proposes the introduction of 11 “mandatory grounds”. However, in fact the proposals would suggest that only 8 grounds would be truly mandatory grounds where once the ground is established the Tribunal can make an order for repossession without further consideration of the facts. In addition to these grounds there would be 3 further grounds (concerning unpaid rent, anti-social behaviour and breach of tenancy conditions) which, whilst they purport to be mandatory, allow the Tribunal to consider how the ground was established and its severity before determining whether repossession should be ordered. Therefore, the proposed system would, in reality, maintain both mandatory and discretionary grounds. Unfortunately, this proposed system appears little different from the system it sought to replace and indeed in some ways appears more uncertain and complicated. Consultation is ongoing to determine exactly how these grounds will operate and it is to be hoped that the picture will become clearer over time.

Abolition of Pre Tenancy Notices

At present certain information concerning the type of tenancy which the prospective tenant is entering into must be provided before the tenancy commences. The consultation determined that across the board the feeling was that these notices are confusing and superfluous. As a result the Scottish Government is proposing the abolition of these notices and considers that the set form tenancy agreement, which is also a new development, should make the process less confusing for landlord and tenant alike. However, in essence little will change as the set tenancy agreement will include a section which notifies the tenant as to the ramifications of the tenancy agreement and the circumstances under which they could be required to leave the property.

Harmonisation of Termination Notices:

A majority of respondents were in favour of a tiered notice period for terminating a tenancy but there were significant concerns as to the various notices currently required.

The Scottish Government has proposed that a tenancy be divided into two stages; an initial stage (which can be agreed between parties but will typically be 6 months) and a subsequent stage. During the initial stage neither the landlord nor the tenant will be permitted to terminate the tenancy unless one of the fault grounds is raised. After this period the tenancy would continue indefinitely unless notice is provided in line with a tiered notice period schedule which essentially requires longer notice periods for tenancies which have been in place for longer periods of time. However, it should be remembered that under the Scottish Government proposals, regardless of when the notice period expires, in some cases the landlord must still demonstrate that a ground for eviction has been established and that it is reasonable for eviction to take place. Therefore in some cases the actual importance of the notice periods is somewhat unclear as the current proposal would seem to indicate that the fault grounds could be used at any stage during the tenancy.

The Scottish Government has also proposed the replacement of the Notice to Quit, Notice of Intention to Raise Proceedings and S.33 Notice with a single “Notice to Leave.” Hopefully, this will simplify an overly complicated area of tenancy law which has frustrated both landlords and tenants. However, similar to the set form tenancy agreement, the exact wording of the Notice will not be determined by the current bill but by subsequent legislation. Furthermore, significant debate remains as to the exact notice periods which shall be used in the tiered system.

Summary:

Whilst significant progress has been made to simplify the tenancy process, the Scottish Government appears to be struggling to harmonise the wishes of tenant groups with the wishes of landlords and property managers. In particular there is tension between those who wish to create a more secure right of possession for tenants and those who believe that the leasing market is being transformed into a quasi-social housing market for which private landlords will be required to bear the burden. As a result certain aspects of the proposal are perhaps more complicated and uncertain than the inadequate provisions they seek to replace. It will likely require much further consultation before a new tenancy law is created which is fit for modern purposes.

Alastair Johnston
Solicitor – Dispute Resolution
@BlackaddersLit
www.blackadders.co.uk

 

 

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